Directors' report and strategic report
Every UK company except a micro-entity prepares a directors' report. Medium-sized and large companies also prepare a strategic report, and a large company's strategic report includes a section 172(1) statement on how the directors had regard to stakeholders. Each report is approved by the board and signed by a director or the company secretary.
Key facts
| Company size | Directors' report | Strategic report |
|---|---|---|
| Micro-entity | Not required | Not required |
| Small | Required, with the small companies exemption statement | Not required |
| Medium-sized | Required | Required; non-financial KPIs may be omitted |
| Large | Required | Required, with the section 172(1) statement |
As at 25 October 2026.
What a directors' report contains
- The names of everyone who was a director at any time during the year.
- If the accounts are audited, a statement that, so far as each director is aware, there is no relevant audit information of which the auditor is unaware, and that each has taken the steps needed to find out.
- For companies that are not small, the dividend the directors recommend.
- Political donations and expenditure over £2,000 in total.
A small company's report states, above the signature, that it is prepared under the small companies exemption. For financial years beginning on or after 6 April 2025 several items were removed, including the policy on employing disabled persons for small companies and, for medium-sized and large companies, financial risk management, likely future developments and research and development.
What a strategic report contains
A fair review of the business, a description of its principal risks and uncertainties, and a balanced analysis of its development, performance and position, with financial key performance indicators. A large company adds the section 172(1) statement (Companies Act 2006, s414CZA).
Large companies also report on their payment practices in the directors' report for financial years beginning on or after 1 January 2026, except in their first financial year and in a year in which they qualify as medium-sized.
Frequently asked questions
Does a small company need a strategic report?
No. A company entitled to the small companies exemption does not prepare a strategic report. It prepares a directors' report, which it may leave out of the accounts it files at Companies House.
Who signs the directors' report?
The board approves it and a director or the company secretary signs it on the board's behalf.
Does a micro-entity prepare a directors' report?
No. Section 415(1A) of the Companies Act 2006 exempts companies that qualify as micro-entities from preparing a directors' report.
Sources
- Companies Act 2006, section 414A
- Companies Act 2006, section 414CZA
- Companies Act 2006, section 415
- Companies Act 2006, section 415A
- Companies Act 2006, section 416
- Companies Act 2006, section 419
- SI 2008/409, Schedule 5 (directors' report of a small company)
- SI 2008/410, Schedule 7 (directors' report of a medium-sized or large company)
- The Companies (Directors' Report) (Payment Reporting) Regulations 2025 (SI 2025/1152)
Prepare your statutory accounts
Registration opens soon. Join the waitlist and we will email you when you can prepare your first set of accounts, which is free.
Join the waitlistGeneral information about UK company law and tax, not legal or tax advice. The directors remain responsible for the accounts and returns they approve and file.